Winsway Enterprises Holdings Ltd. said it hopes to reach a preliminary agreement with creditors on its debt restructuring within two weeks, while it awaits fresh capital from new investors.
The Chinese importer of coking coal, which defaulted on $309.3 million of bonds last month, may ask for a reprieve from noteholders in the form of a debt-to-equity swap, or a maturity extension and interest rate reduction, according to Beijing-based spokeswoman Laura Shi.
“We have a white knight, which is still doing due diligence and getting the necessary approvals,” Shi said by phone on Friday, without elaborating. “We understand bondholders will still want time to scrutinize our accounts.”
China’s economic slowdown has caused a slump in commodity prices from iron ore to copper, with coking coal declining two-thirds from its peak in 2011. Sixteen of the 58 defaults globally in 2014 were among companies in natural resources, Standard & Poor’s said in a January report. Winsway missed a $13.15 million coupon on its 2016 notes on May 8, the second default this year by a Chinese dollar-bond issuer after Kaisa Group Holdings Ltd.
Financial Lifeline
Its 8.5 percent 2016 notes gained 1.8 cents to 27.34 cents on the dollar as of 12:38 p.m. in Hong Kong, Bloomberg-compiled prices show. The securities, sold at par or 100 cents in 2011, touched a record-low 24.84 cents May 29. Winsway’s shares have surged 78 percent to HK$0.385 from this year’s low in February.
Winsway is asking bondholders to take an unspecified haircut on the notes while it seeks a financial lifeline from new equity investors and loans from banks, Winsway said in its annual report published in April. Its untapped credit lines fell to HK$1.49 billion ($192 million) on Dec. 31 from HK$2.4 billion a year earlier.
The company is paring its stake in Canadian coal-mining unit Grand Cache Coal Corp. and selling it to Hong Kong-listed UP Energy Development Group Ltd. for a cash consideration of $1 because the capital expenditure needed to continue was too much, Chairman and controlling shareholder Wang Xingchun said in the report.
The Grand Cache Coal sale has been pushed back to June 30 as the parties seek more time to satisfy conditions precedent, according to stock exchange filings.
APAC Financial Markets • #China, #DebtRestructuring, #Default, #RescuePlan, #WinswayEnterprisesHoldings #MarketNews
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